[Congressional Record Volume 150, Number 70 (Tuesday, May 18, 2004)]
[Senate]
[Page S5610]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself and Mr. Thomas):
  S. 2433. A bill to amend the Internal Revenue Code of 1986 to allow 
self-employed individuals to deduct health insurance costs in computing 
self-employment taxes; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, today my colleague, Senator Thomas, and 
I are introducing the ``Equity for Our Nation's Self-Employed Act of 
2004.'' This legislation would reduce the cost of health insurance for 
the self-employed by allowing these workers to exclude the cost of 
their health insurance from their income for purposes of calculating 
their payroll taxes. Although the self-employed are now allowed an 
income tax deduction for the amount they pay for health insurance, they 
must still calculate their payroll taxes as if they were not allowed 
this income tax deduction. Essentially, the self-employed are paying 
payroll taxes on the amount they pay for health insurance. The 
legislation we are introducing today would stop this inequitable tax 
treatment and allow the self-employed to deduct the amount they pay for 
health insurance from their calculation of payroll taxes.
  This problem affects all self-employed who provide health insurance 
to their families. According to the Census Bureau, there are almost 
74,000 self-employed workers in New Mexico. While we have no idea how 
many of these people in New Mexico have health insurance, we do know 
that roughly 3.6 million working families in the United States paid 
self-employment tax on their health insurance premiums. Estimates 
indicate that roughly 60 percent of our Nation's uninsured are either 
self-employed or work for a small business. According to the Kaiser 
Family Foundation, self-employed workers spend more than $9,000 per 
year to provide health insurance for their family. Because they cannot 
deduct this as an ordinary business expense, those that spend this 
amount will pay a 15.3 percent payroll tax on their premiums resulting 
in almost $1,400 of taxes annually.
  This problem was identified by the National Taxpayer Advocate in 
several of her annual reports to Congress and is supported by a variety 
of groups including the National Association for the Self-employed, the 
National Small Business Association, the National Federation of 
Independent Businesses, the U.S. Chamber of Commerce, the U.S. Hispanic 
Chamber of Commerce, and the Small Business Legislative Council.
  I look forward to working with my colleagues to get this important 
legislation passed.
                                 ______